China and Saudi Arabia: A New Alliance?

China-Saudi Arabia ties are seeing more political-military cooperation, but oil continues to dominate.

By Wang Jin for The Diplomat

September 02, 2016

With the G20 Summit held in Hangzhou fast approaching, Saudi Deputy Crown Prince Mohammed bin Salman Al Saud’s visit to Beijing ahead of the event has attracted considerable attention. China placed great importance on Salman’s visit, with Chinese President Xi Jinping himself meeting Salman at Diaoyutai State Guesthouse. Before the Xi-Salman meeting, Saudi Minister of Housing Majed Al-Huqail, accompanied by Salman, signed a memorandum of understanding (MoU) with Chinese Deputy Minister of Trade Qian Keming in the field of housing on August 31. Both the political meeting and the agreements signed during the visit seem herald closer ties between China and Saudi Arabia.

Prince Salman’s visit to China witnessed 15 agreements and memorandums of understanding signed on Tuesday. The agreements range from understandings on energy development and oil storage to cooperation promises on housing development and water resource issues. Meanwhile, Huawei, a leading global ICT solutions provider, on Wednesday received an investment license from Saudi Arabia.

As deputy crown prince, Mohammed Bin Salman is actually the “power center” of the Saudi Arabia. Because of poor health, foreign visits by King Salman– Prince Mohammed bin Salman’s father– are rare and it is the deputy crown prince who acts as the “mouthpiece” for his father, the king. Meanwhile, Mohammed bin Salman is arguably the most important political leader in Saudi Arabia in his own right. He is the youngest defense minister in the world, and he is also the chief of the House of Saud royal court and the chairman of Council for Economic and Development Affairs.

Prince Salman is an ambitious young leader who is taking steps to construct new geopolitical surroundings in the Middle East. Domestically, he desires to transform Saudi Arabia from an oil state to a leading economic power. It was during Prince Salman’s tenure as defense minister that “Operation Decisive Storm,” a military intervention led by Saudi Arabia in Yemen, began. In January of 2015, Prince Salman was named as the chair of the newly established Council for Economic and Development Affairs (CEDA), replacing the disbanded Supreme Economic Commission, and it is under his leadership that the CEDA published the economic reform program “Vision 2030,” which detailed goals and measures in various fields, from developing non-oil reserves and privatizing the economy to sustainable development.

As a leader with ambitious plans to influence not only the Middle East but also the world, Prince Salman, along with many other leaders in Middle East, is interested in East Asian markets and wants to explore deeper cooperation between Saudi Arabia and East Asia. His visit is a good time to ask whether the Saudi-Chinese partnership is living up to its potential.

The foundation for China-Saudi cooperation is energy, and with good reason: Saudi Arabia is the world’s largest oil exporter and China is the world’s largest oil importer. It is not surprising that the two countries are interested in deepening their cooperation with each other under the “One Belt, One Road” strategic outline put forward by Chinese President Xi Jinping and the “Vision 2030” program put forward by Prince Salman. China is also seeking to upgrade its status in the Middle East while Saudi Arabia is trying to hedge its bets in a multipolar world, especially when the United States seems less willing to act as Saudi Arabia’s security guarantor.

Compared with Saudi-U.S. relations, the Saudi-Chinese partnership is relatively young. During the Cold War, Saudi Arabia was wary of “communist expansion” in Middle East, as Riyadh was a firmly anti-communist state. Saudi Arabia was the last Arab country to officially recognize the People’s Republic of China when it did so in 1990. It was energy demand that truly cultivated the bilateral relationship between China and Saudi Arabia. In 1999, Chinese President Jiang Zemin became the first Chinese head of state to visit Saudi Arabia, where he signed a Strategic Oil Cooperation agreement.

Since then, there have been countless visits between senior leaders of two countries, but the scope of cooperation concentrated primarily on energy. Saudi-Chinese trade has exploded from around $1 billion in 1990 to more than $70 billion by 2013, surpassing Saudi-U.S. bilateral trade in the process. China is Saudi Arabia’s largest customer for oil and Saudi Arabia in turn is China’s largest provider of oil, meeting around 20 percent of Chinese demand.

At the beginning of this year, after Xi’s visit to Riyadh, a part of the Chinese president’s first official visit to the Middle East after assuming office in 2013, the two countries agreed on a more comprehensive strategic partnership that would include cooperation in economic, political, and military fields.

Many analysts believe China is likely to further its political cooperation with Saudi Arabia. This is especially increasingly likely because of the recent strains in Saudi-U.S. relations. There is a growing sense among Saudis that it has been overly dependent on Washington. These concerns reached new heights after the lifting of sanctions on Iran, Obama’s reversal on his decision to strike Syria’s Bashar al-Assad after the “red line” of chemical weapons use was crossed, and America’s refusal to support Egypt’s Hosni Mubarak during the Arab Spring. Given China’s “One Belt One Road” strategic outline and China’s increasing engagements in Middle East, it is also unsurprising that security cooperation between Saudi Arabia and China has improved in recent years, highlighted by a “goodwill” visit of the Chinese navy to Jeddah for the first time in 2010 and Chinese arms sales to Saudi Arabia worth around $700 million from 2008 to 2011.

But there are also factors complicating a broader bilateral partnership between China and Saudi Arabia. On the one hand, China is also interested in improving ties with Iran, the “mortal enemy” of Saudi Arabia. Meanwhile, China has shown neither the willingness nor the capability to take over the role the United States currently plays in the region. Chinese arms sales to Riyadh may have significantly increased during the past decade, but in 2011 alone the U.S. sold arms worth over $33 billion to Saudi Arabia. Meanwhile, an absolute majority of Saudi young elites, as are China’s young elites, were influenced by U.S. “soft power” after studying at U.S. universities and colleges. In the short run at least, the Saudis will continue to look to the United States for military and political support and the partnership with China will remain primarily economic.

On the other hand, Saudi Arabia’s interests in Asia are not concentrated only on China, but also Japan, which is viewed by Chinese as a competitor in East Asia. Interestingly, Prince Salman’s visit to China and Japan were arranged simultaneously. Prince Salman arrived in Japan on August 31 on an official visit as a representative of King Salman invited by the Japanese government. The official delegation accompanying Prince Salman is expansive, including Saudi Arabia’s minister of finance, minister of economy and planning, minister of commerce and investment, minister of state, minister of culture and information, minister of foreign affairs, minister of energy, industry, and mineral resources, minister of labor, chief of general intelligence, and a number of others. It is obvious that Saudi Arabia desires to keep a balance between China and Japan.

Although China-Saudi Arabia bilateral ties are growing significantly, especially under the “One Belt, One Road” strategic outline put foreword by China and the “Vision 2030” program put forward by Saudi Arabia, the relationship still remains as an energy-economic partnership not a military-political alliance. In the past several years, the potential for military-political cooperation has increased, especially as America’s appetite to play a role in the Middle East is diminishing while that of China is growing. Yet despite this growth, the relationship between China and Saudi Arabia continues to be one dominated by the economics of oil.

Wang Jin is a PhD. Candidate at the School of Political Science, University Haifa, Israel and a Part-time Research Fellow at the Middle East Center, Xiamen University, China.